Genzyme Saved 13% on its $29M Energy Spend in 2011

A longtime leader in energy and sustainability, Genzyme, reduced its energy spending and emissions considerably in 2011. This is a major accomplishment for any organization, and especially for a large, complex multinational.  Sustainability and energy program leaders could learn much from this impressive program at Genzyme.

For those unfamiliar with Genzyme, it is one of the world's leading biotechnology companies, employing more than 10,000 people with $4 billion in annual revenue. Genzyme's mission is to discover and deliver transformative therapies for patients with rare and special unmet medical needs, providing hope where there was none before.

The company has sophisticated manufacturing plants and sales offices throughout the world. In 2011, Sanofi (NYSE: SNY), one of the world's largest pharmaceutical companies, purchased Genzyme, and the operational integration of Genzyme is taking place this year.

I recently spoke to Jeff Holmes, Genzyme's principal environmental engineer, and Steve Driver, the company's energy demand manager, about their energy-saving initiatives. Below is a slightly condensed and edited version of our conversation.

Paul Baier: What is the mission of the energy and sustainability team and the program?

Jeff Holmes: The mission of the global energy and sustainability program is to reduce our $29 million global energy expense and achieve corporate sustainability goals through the continuous reduction of energy consumption. This program continues to contribute to the financial strength and brand image of our company.

We are a cross-functional team of engineering, procurement, and environmental professionals, and we connect with a network of talented and highly capable professionals located at each of our 15 major sites who implement energy efficiency projects on a daily basis.

Baier: What were the program's key accomplishments in 2011?

Holmes: We exceeded program goals in 2011. Notable achievements include achieving publicly stated 25 percent carbon reduction goal two years early. We completed 79 energy projects. We achieved $4 million in annual program savings versus a stretch target of $2.8 million. We purchased 24 percent of global electricity from renewable sources (at 0.6 percent cost premium). We also made significant progress toward multiple green building certifications and laid the foundation for employee engagement in energy and sustainability activities.

The 79 energy projects consisted of one new energy contract, 75 energy savings projects and three capital rebates projects. The associated financial return of the projects is impressive, with an overall internal rate of return (IRR) of 278 percent. Collectively, these projects provided a 3.7-month payback.

Baier: What were some of the key projects that drove these savings?

Holmes: The principal projects that drove savings were:

* new electricity contracts
* lighting upgrades
* reduced intake of outdoor air
* commissioning of buildings
* variable frequency drive installations
* repair of compressed air and steam leaks
* chilled water optimization
* exhaust heat recovery
* combined heat and power
* energy-efficient boiler controls
* clean steam optimization

One noteworthy project that is still under way is the commissioning of a LEED-Gold office and laboratory building in Framingham, Mass. By combining ongoing commissioning and retroactive commissioning, a total of $100,000 in potential energy savings was identified. To attain the savings, an investment of $50,000 was required by Genzyme with an additional $50,000 rebate by the local gas and electric utility, all of which makes for a very quick payback.

Baier: These are very notable results. What are the key benefits of these accomplishments?

Holmes: We achieved several external awards that strengthen our corporate brand and help with employee recruitment and retention. Genzyme was selected as a winner of the inaugural Climate Leadership Awards sponsored by the U.S. Environmental Protection Agency and its partners, and our energy program drove a high Carbon Disclosure Project score (Genzyme ranked sixth out of 33 global healthcare companies).

Baier: What are the key performance indicators that senior management and your team watch?

Holmes: We emphasize different goals at the corporate and local levels. The stated Genzyme corporate goal was a 25 percent reduction of greenhouse gas emissions normalized to revenue and we track direct and indirect emissions from any global activity that is in our operational control. But this is not a very meaningful metric at the site level. At the site level, we focus on cost, electric usage, and carbon reduction from the implementation of energy conservation measures.

Baier: Genzyme's accomplishments with green buildings are extraordinary. How does the green building effort fit into your energy and sustainability goals?

Holmes: Our green buildings program has been a cornerstone element of our energy savings and sustainability program. To date, we have earned 13 green building certificates for 12 buildings located in four different countries, including numerous LEED certifications, one French HQE standard certification, and one U.K. Carbon award. An additional three registered green building projects are in progress.

Baier: What tools do you use to support your program?

Holmes: We use a utility bill management service to build a database of all the energy use and costs for all of our global facilities and track basic information for our energy projects with a simple spreadsheet.

Baier: What are your goals in 2012?

Holmes: Our major goals this year are to consolidate contracts with Sanofi where regional opportunities make sense and coordinate site reduction targets through our corporate operations' "Common Site KPI" process. We want to increase plant energy assessments with an internal energy audit team and increase and standardize building commissioning. We plan to coordinate our activities with the Genzyme Asset Care Excellence (ACE) reliability program. We will continue our green building certification program.

Baier: What are the key lessons you've learned over the last two years that you'd like to share with others?

Holmes: To achieve meaningful success, a cross-functional team structure is essential. Our core team is engineering, environmental and procurement. Regular communication with the sites is key -- there were countless energy conservation measures that took place at the sites that no one at corporate knew about.